IMF questions sustainability of Portuguese public debt

A woman jogs by the Tagus riverbank next to the April 25th bridge in Lisbon on a foggy morning

The International Monetary Fund (IMF) questioned the sustainability of Portuguese public debt, in the face of economic weakening and relaxation of the deficit in the first post-program monitoring report, issued Friday.
The IMF forecasts the debt ratio as a percentage of GDP, despite the fact it is falling, will be 125.7 percent, whilst the government expects 123.7 percent, at a time when the economy is weakening (growth of 1.2 percent in 2015 instead of 1.5 percent) and the budget deficit will be 3.4 percent and not 2.7 percent as stated by the government.
“Debt sustainability is based on more structural reforms to enhance external competitiveness and boost potential growth in the medium term,” but the International Monetary Fund (IMF) feels that “impending elections” are reducing the government’s ambition, but also sees a weakening of political consensus on reforms.
In the report, the IMF indicates that the Portuguese public deficit will neither be 2.7 percent, as Brussels expects, or 3.3 percent, as forecast by the European Commission, but rather 3.4 percent of gross domestic product (GDP).
The IMF insists on shock treatment for public expenditure on salaries and pensions, with the reduction or even elimination of salary supplements and recommends more layoffs and sending more staff for retraining. MDT/Macauhub